I have just bought a car from a mate with either a hole in the piston or knackered piston rings, i've been weighing up replacement engine / fix existing engine.
For a replacement engine your looking at about 700 quid plus fitting if your not too handy but for that price you could replace rods & pistons with forged items and have a bullet proof bottom end.
Suppose the questions to ask are -
Can you change the engine yourself / or pay for installation of new engine ?
Are you planning on tuning it ? (i.e will you be taking it above the limit of the weak-ish rods)
If its just suffered one piston failure i would investigate why ???? have you had the boost turned up and caused the mixture to lean out causing detonation?
Why not just get some new rings / one piston from a
dealer and have the engine repaired?
If your happy with standard-ish power then an engine swap from the earlier 1.8T should be fine as the power of the R is down to the k04 turbo different throttle bodys etc which should just bolt onto a replacement engine.
Im personnally gonna stroke the engine by changing the crank for a tdi one and bore the block to 83mm. This will put me in good stead for my future Big Turbo plans.